• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

Q&A bank q5.14

S

shdh

Ton up Member
Hi,

In q5.14 in question Bank, the question states that the investment in the mills are done at the start of the next 5 years. So in this sense, it means that the first investment is made at time 1 and so on. This we should be calculating the PV at time 0 and not at time 1.

But in its solution, it appears that the question has taken the first investment at time 0 and not time 1. Accordingly it did the sum.

So I want to ask that why did we take the PV at the date when the first mill was bought and not one year before it?

Thanks & Regards
Shyam
 
John Lee said:
The start of the first year is time 0.
Click to expand...

Sir,

Thank you for your reply.

I get your point but my query still holds. The question is stating that the first one is bought from the next year (the year start of the next 5 years). So accordingly shouldn't we take the time of purchase as 1 and not 0?

Thank you for your help!

Regards,
Shyam
 
"One mill is purchased at the start of each of the next 5 years. The cost of refurbishment is £20,000 per mill and is payable continuously for one year after the purchase. "

I can't see where you are getting your idea from the start of each of the next 5 years are times 0, 1, 2, 3, 4.
 
You must log in or register to reply here.
Back
Top